European Union warns Russia over Ukraine deal

Feb 13, 2015, 7:49 AM EST
Ukrainians and comrades attend the funeral ceremony of Russian citizen Kirill Heinz, 28, a serviceman in the Ukrainian 'St. Maria' volunteers battalion killed in the eastern Ukraine conflict, in front of the St. Sophia Cathedral in Kiev, Ukraine, 12 February 2015.
AFP/Getty Images

Russia will face fresh sanctions from the E.U. if a deal to end the Ukraine war is not fully implemented, German Chancellor Angela Merkel has warned.

According to the BBC, she said E.U. leaders had asked officials to prepare further sanctions in case an agreed ceasefire was not respected. The leaders of Russia, Ukraine, Germany and France sealed a deal on Thursday after marathon talks in Belarus.

The ceasefire is due to begin in eastern Ukraine at midnight on Saturday but both sides remain sceptical. Pro-Russian rebels have signed the agreement, which also includes weapon withdrawals and prisoner exchanges, but key issues remain to be settled.

Clashes between government forces and the rebels continued on Thursday and one Russian-backed commander said his forces would not stop fighting. Thousands of people have died in almost a year of fighting in the region.

However, new shelling has been reported around the rebel-held east Ukrainian cities of Donetsk and Luhansk.

There are no confirmed reports of casualties. Both cities are near the front line where the pro-Russian rebels face government forces.

BBC journalists in Donetsk heard new shelling on Friday morning, though they said it sounded less intense than in recent days. Luhansk also came under bombardment overnight - with Russian TV reporting some of the heaviest fighting in months. On Friday morning, a military spokesman in Kiev said eight members of Ukraine's military had been killed in fighting against separatists in the past 24 hours.

In another development, the World Bank said on Thursday it was ready to provide up to $2bn billion (£1.3bn) in financial assistance to Ukraine this year as part of an international package of support.

The U.S.-endorsed cease-fire between Russia and Ukraine is widely viewed as a win for Russian President Vladimir Putin. But it might be exactly what Ukraine needs to prevent an economic collapse. At, blogger David Francis writes that the deal forces Ukrainian President Petro Poroshenko to acknowledge gains made by pro-Russian separatists.

Ultimately, Putin is the only one who can stop the flow of Russian weapons and soldiers across the border with Ukraine, a key component of the deal. And critics in the United States continue to insist military assistance is needed to deter Putin. But it also allows Ukraine to receive a cash injection that is needed to save its failing economy.

Ukraine’s currency, the hryvnia, is tanking — it plummeted 50 percent last week, causing a spike in inflation. Military operations are draining the country’s coffers. Foreign investors, weary of uncertainty, are staying away. Trade with Russia — its largest partner — has dried up, strangling Ukraine’s industrial base.

Sean Kay, a professor in the department of politics and government at Ohio Wesleyan University, told Foreign Policy the debate over the U.S. should send weapons is obscuring the International Monetary Fund’s $17.5 billion lifeline to Ukraine that was announced soon after the cease-fire was signed.

Once other donors kick in, Ukraine is set to get about $40 billion. Right now, the country of some 45 million people only has just $6 billion in currency reserves, down 15 percent in the last month.

By comparison, Spain, which has a population of 47 million, has $51 billion in reserves.

“Ukraine may have needed this deal as much as anyone,” Kay said. The IMF “was reticent to make that commitment without the prospect of a stable window, and Ukraine probably felt a pretty significant need to create stability.”

“For all the bluster about sending weapons, I don’t hear the same people making the argument that we should be sending a big check,” he said. For now, Secretary of State John Kerry’s backing of the deal takes weapons off the table. It also means the momentum to send arms to Ukraine building over the last two weeks has crashed.